Sue Read,

managing director, Lavender Financial Management

How often over recent months have we all looked forward to “when things get back to normal”, without thinking about what ‘normal’ actually might be? I’ve worked in Financial Services for over 25 years now and ‘normal’ has certainly changed over that period - but perhaps in the last couple of years more than any other time. And for those of us left in the mortgage industry ‘normal’ is unlikely to ever to be the same again. Let’s look back to those halcyon bygone days of yore. Mortgage enquiries were easy to come by. Underwriting was simple and unchallenging and as a consequence business levels were high. Many advisers were raking in cases and making lots of money, in many cases for a lot of old rope. Regulation came along and although many complained about the extra burdens it placed upon them in

to bear. However, the relationship has become more strained since the onslaught of the credit crunch. Brokers feel that lenders are cutting them out of the loop or putting up unnecessary hurdles when it comes to the business they have submitted and lenders feel that intermediary business doesn’t give them the opportunity to earn as much as they would had the borrower come to them direct.

Net Lending BSA

Period

2002 2003 2004 2005 2006 2007 2008 2009

10,214 18,665 17,078 13,063 16,447 12,890 4,960 -7,367

Building societies

£m

terms of paperwork and box ticking, on the whole it interfered little with day to day activities, especially for those of us who’d been doing a “proper job” anyway. Then in 2007 our lives began to

change. Northern Rock paved the way for the disappearance of many of our lending partners and under- writing belts tightened until our eyes popped. The range of schemes available dropped dramatically and required deposit levels increased beyond all previous expectations. A new dawn of affordability rose with cloaked rationale behind it. Basically, lending stopped.

Three years on and the situation has eased somewhat. There are lenders lending, but only on very tight terms and to the “right” applicants. Advising clients is a very imprecise science, as the criteria lenders use remain mysterious and unclear. And that, of course, assumes advisers are getting enquiries.

Base rate and lenders’ standard variable rates remain low. So clients coming off deals have moved onto SVR and can see no good reason to

BRANCH NETWORKS

The biggest problem lenders face today

is that the number of branches they have throughout the country might have been sustainable in buoyant times. However, now that we are where we are these branches have become excess baggage. During a normal cycle a bank could have modulated its distribution base up or down to suit the level of demand available. However, the speed

Banks

Share

13.0% 18.5% 17.0% 14.3% 14.9% 11.9% 12.1% -64.0%

£m

48,928 47,580 42,844 33,232 29,985 13,825

Share

62.1% 47.1% 42.5% 36.5% 27.1% 12.8%

-42,876 -104.2% 43,133 375.0%

remortgage, at least for now. This must be becoming a bigger and bigger potential problem for lenders as one day that enormous mass of borrowers will see interest rates start to rise and want to jump into new deals - and managing that mass will be a nightmare. So. What is ‘normal’ now? For me it’s a vastly changed working life. It’s not 30 cases a month, that’s for sure. It’s a remortgage market dead on its feet. It’s thinking “what have I done today to get some business in?” each and every day. It’s about being proactive rather than reactive, making sure I maximise my sales for every single client I get. It’s fi nding myself a niche (in my case equity release) and promoting that heavily.

It’s about being tenacious and not letting cases slip through my fi ngers, which means fi ghting even harder when lenders say “no”. But most of all it’s about hanging in there. I am still convinced that the mortgage adviser has knowledge and skills that clients need but we must not be complacent. Never has the maxim “the harder I work, the luckier I become” been more true.

and savagery with which the down- turn came left them all with no time to strategise and modulate accordingly. It’s been like a Tsunami sucking the tranquil beach-front waters away. If they had it their way, many lenders would cull their branch and staff levels far more than they might have done already. But there is much political pressure to keep these branches open as they offer essential services to remote areas of

Other Specialist Lenders

£m

19,643 34,441 40,779 45,087 63,950 81,040

Share

24.9% 34.1% 40.5% 49.5% 57.9% 74.9%

76,649 186.4% -25,728 -224%

Others

£m

39

396 6

-224 69

390

2,399 1,462

Share

0.0% 0.4% 0.0% -0.2% 0.1% 0.4% 5.8%

12.7%

Total

£m

78,827

101,083 100,706 91,160

110,450 108,149 41,130 11,502

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